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How to Protect Yourself in Divorce when there are Valuable Assets

Premarital Assets In New Jersey

Expert Beacon | Brad Micklin

Divorce can be a difficult and lengthy process. That’s especially true for couples trying to split up extensive and valuable assets. For the breadwinner of the family, this process can be especially taxing because he or she will likely need to pay alimony and other concessions to the spouse during the process of property division. Keep in mind, this part of the divorce is much like a business transaction. Try to keep your emotions out of it and do your homework. Know what assets you have, what assets you want and be willing to compromise.


Do know what you have and keep copies

One of the most important pieces of evidence you can provide during a divorce hearing are records. These documents will help to trace and verify your separate property, income, and inheritance or family gifts. Examples include: all tax returns, loan applications, wills, trusts, financial statements, banking information, brokerage statements, loan documents, credit card statements, deeds to real property, car registrations, insurance inventories, and insurance policies.

Also, be prepared. For instance, having a financial planner or accountant work with your divorce lawyer or mediator can help you make the right decisions about a divorce settlement that includes a more comfortable retirement.

Do take photos

Because it is common for divorcing spouses to hide assets, make sure you document and even take photos of valuables around the house—jewelry, art, Oriental carpets, china, cars, boats, etc. Even if you’re not sure of the value, take a photo. Be especially mindful of any collections or items of value that you brought into the marriage.

Do consider your half

Half of everything is yours—if you acquired it during your marriage. Even if there is something you do not want, like the coin collection or motorcycle, you can use it to trade for something you do want. Included in this division is school. So keep that in mind if your spouse helped put you through graduate school, law school, or medical school, He or she may be entitled to some reimbursement for the cost of his tuition.

Do be prepared to share your social security benefits

In many cases, the spouse of a breadwinner is eligible to collect on social security. For example if your spouse meets the following criteria, she will be able to tap into your social security benefits:

  • You are 62 or older
  • You have been married for 10 or more years
  • You are currently married
  • Your own earnings do not entitle you to a higher benefit

Do keep track of divorce costs

What you pay your divorce advisers will come out of your settlement, so make sure you keep track of those costs as they will be calculated into the final total.


Do not get too caught up in the house

You may have a sentimental attachment to the house, but keeping it doesn’t always make financial sense. That is especially true in high asset divorces when the house is large or extravagant with a hefty upkeep or property tax bill.

Compared with a well-diversified retirement savings account, a home is more likely to have ongoing and unexpected expenses, and its future value isn’t assured.

Do not forget the tax consequences of divorce

Should you take the brokerage account or the retirement plan? Should you keep the house or sell it now? Who should pay the mortgage until it sells? You may need to consult an accountant or tax adviser to determine what makes sense for your situation, and if there’s a chance that your past joint tax returns omitted income or overstated deductions, you may want to consider an indemnification clause to protect yourself in case of an audit.

Do not ignore your spouse’s debt

Hidden debt is a common nasty surprise among divorcing couples. In the nine states with community property laws—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin—you’ll be held responsible for half your spouse’s debt, even if it’s not in your name. You may also run into trouble in a non–community property state if you and your spouse hold credit cards or loans jointly. Get a full credit report to make sure there are no surprises on it.

Do not be too proud (or angry) to pay alimony

Alimony is monetary help to the spouse who was supported financially during the marriage, especially if one parent is in the workforce as the breadwinner of the family. Spouses usually provide alimony in one of three different ways, depending on state laws: as a lump sum, in regular payments or in another predetermined arrangement—say, if you cut a check to a third party to pay an ex’s mortgage.

Certainly, most men and women don’t want to write a check to an ex. But, consider it part of the overall package. If that doesn’t help, remember that it’s tax-deductible.


Splitting assets and working through the financial details of a divorce is not easy, especially for breadwinners. Understanding the financial obligations expected of you during and after the divorce proceedings helps you keep sensible expectations. Do your homework and have a plan for assets that you want to keep and those you can bear to part with. Finally, keep emotions at bay and approach this part of the divorce with your head, not your heart or a sense of entitlement.

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